Orbitz-Worldspan feud flares up again: Each charges the other with fraud

Orbitz filed its lawsuit against Worldspan in the Circuit Court of Cook County, Illinois, on Sept. 16, charging the GDS company with violating the Illinois Consumer Fraud Act. Worldspan responded by filing a lawsuit in the U.S. District Court, Northern District of Illinois, Eastern Division, on Sept. 19, charging Orbitz with violating the Federal Computer Fraud and Abuse Act. Both parties are seeking $50 million in damages.

Much of the cases center on ITA Softwares role in Orbitzs Supplier Direct bookings, those made via a direct link to an airlines system. In late 2002, Orbitz and Worldspan signed an amendment to their original agreement that required Orbitz to use Worldspan for 100% of its non-Supplier Direct bookings.

Orbitz, however, used ITA Softwares shopping engine to search Worldspan for schedules and availability regardless of how the booking ultimately was processed.

Worldspan terminated its relationship with ITA in October 2003. ITA began searching Galileo instead. Orbitzs lawsuit claims that Worldspan was well aware of this arrangement and made no objection to it until after it induced Orbitz to sign a new amended agreement in early 2004.

ITA Software, meanwhile, began developing its own GDS, with booking as well as shopping capability.

Orbitz maintains that it uses neither Galileo nor ITA for CRS services because its actual bookings are made through Worldspan or directly with airlines.

Worldspan disagrees, charging that Orbitz has breached its contract, which calls for GDS exclusivity, by using Galileo and ITA.

Contrary to the myth perpetuated by its public statements, Orbitz has not and does not directly perform the services traditionally provided by CRSs, Worldspan said in its complaint.

Orbitz relies on CRS services for each and every airline segment booked through Orbitz, even where Orbitz characterizes then as Direct Connect segments.

Worldspan said that early in their relationship, it made clear to Orbitz that it was not authorized to use Worldspans availability data in connection with Direct Connect segments until the parties had negotiated appropriate compensation to Worldspan for such use.

Since Worldspan would receive no revenue from an airline for a Supplier Direct booking, it wanted compensation for the shopping hits on its system.

But, it said, when Orbitz launched Supplier Direct in August 2002, it stole Worldspans availability data. Worldspan and Orbitz also disagree over whether Orbitz should pay to have access to low-cost carriers through Worldspan.

The GDS company maintains that Independence Air is participating in its system in a new, optional service Worldspan has made available to its customers.

Orbitz believes it is part of the system to which it has access under its contract with Worldspan.

The latest battle between the two companies comes as no surprise to some industry observers, who have predicted that Orbitz would seek a way out of its contract with Worldspan ever since it was acquired by Cendant Corp., the parent company of Galileo.

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